Toast Inc (TOST.N): Sunny with a Side of Toast

Research evidence excerpt

Toast Inc (TOST.N): Sunny with a Side of Toast

-voice ordering to help QSRs to more effectively service consumers.

2026 data from Technomic Ignite estimates that there are 140K restaurant

drive-through locations across the US, venues that we believe TOST could not

fully participate in prior to Drive-Thru’s rollout (particularly with enterprise level

customers). Given that the company is limiting initial rollout of Drive-Thru to

merchants with 15 or more locations, we believe that TOST’s priority is quickly

penetrating existing enterprise level accounts first before moving downstream to

businesses with smaller footprints.

– We note that while TOST acquired Delphi Display Systems in 2023 (provider

of digital display systems and drive-through hardware), we think that

integration of TOST’s core SaaS operating platform with Delphi’s hardware

did not fully realize latent synergies, at least when compared to the current

Drive-Thru solution. We would point out that Drive-Thru is far more

automated and designed for maximizing service efficiency as opposed to

simply allowing a restaurant an incremental avenue of conducting sales.

Indeed, we think this is why TOST’s success so far in servicing drive-through

needs have been largely confined to non-enterprise merchants who typically

do not depend overly heavily on drive-through sales. Consequently, we think

that going forward, enterprise wins should accelerate, given that Drive-Thru

fills TOST’s previously missing product gap.

n Restaurants Unlikely to Harness AI to Roll Out Custom Software Solutions. We

believe that individual restaurant operators, particularly those that are middle

market or independents with limited location count, are unlikely to directly